It was inevitable that reviewers of Jay Bennett's solo work would always feel duty-bound to mention the time he spent with Wilco, the Chicago-based band he joined in 1994. As a songwriter and multi-instrumentalist, Bennett, who has died of undetermined causes aged 45, was a key contributor to the band's albums Being There, Summerteeth and their most successful effort, Yankee Hotel Foxtrot. The last two in particular are often viewed as the summit of the band's achievements.

However, in 2001 Bennett fell out with the band's leader, Jeff Tweedy, during the recording of Yankee, in events unflatteringly recorded in Sam Jones's documentary film I Am Trying to Break Your Heart. Tweedy fired him, and Bennett had subsequently been pursuing a solo career.

Bennett was born in the Chicago suburb of Rolling Meadows, and began playing with rock bands while still a teenager. He attended the University of Illinois at Urbana-Champaign, earning degrees in maths and political science, but music was always his primary focus. In the late 1980s he formed the alternative-rock band Titanic Love Affair, which survived into the mid-90s and released three albums before being dumped by its record label.

By 1995, Bennett was working at a video repair shop in Champaign when he was approached by Wilco, who had just recorded their debut album, A.M., and were looking to expand their country-rock sound. Bennett's abilities on keyboards and multiple stringed instruments began to bear fruit on the follow-up, Being There (1996), in which Tweedy was consciously pushing the band away from its supposedly "alt-country" roots and introducing more diverse styles, from power-pop to psychedelia.

By the time Wilco began work on Summerteeth in 1997, Tweedy was relying heavily on Bennett to write music to accompany his lyrics, and the album's orchestrated sound owed much to Bennett's efforts. Like its predecessor, Summerteeth earned rave reviews in Britain and the US, hailing Wilco as true rock auteurs in a world of pale imitations, but the group was experiencing turbulence with its record label, Reprise, a subsidiary of the debt-laden Warner Bros.

An attempt to please the label by recording a radio-friendly version of the song Can't Stand It flopped, and Summerteeth sold fewer copies than Being There. It also sold less well than Mermaid Avenue (1998), on which Wilco collaborated with the British musician Billy Bragg in adding music to some unreleased lyrics by the folk icon Woody Guthrie. Its success might have been greater still had Bragg not clashed with Bennett over the way the songs were produced, and further squabbles arose over royalties and promotional touring. Nonetheless, the parties managed to patch up their differences to make Mermaid Avenue Vol 2 in 2000.

The same year Wilco reconvened to make what would become Yankee Hotel Foxtrot, little anticipating the difficulties that lay in store. Tweedy became intrigued by the work of the experimental musician and producer Jim O'Rourke, but inviting him to join the recording sessions provoked clashes with Bennett over who should mix the songs, while O'Rourke also tampered with the contributions of other band members. When the disc was finally completed, Bennett, who had disagreed openly with Tweedy about the album's direction, was sacked. A full-blown crisis erupted when Reprise rejected the album and asked Wilco to leave the label, but the band negotiated an arrangement whereby they were able to take the finished tapes to the Nonesuch label. The ensuing publicity helpfully heightened the impression of Wilco as crusaders against a heartless record industry, and the album subsequently sold 600,000 copies while garnering euphoric write-ups.

Bennett was left to cope with his role as solo artist. He retreated to his studio, Pieholden Suites, in Urbana, where he worked with Edward Burch on his first post-Wilco album, The Palace at 4am (2002). Bigger Than Blue (2004), The Beloved Enemy (2004), The Magnificent Defeat (2006) and Whatever Happened I Apologise (2008) followed. A sixth album, Kicking at the Perfumed Air, was near completion at the time of his death.

Ill feeling from his Wilco years continued to dog Bennett and, earlier this month, he filed a lawsuit against Tweedy, seeking $50,000 damages for unpaid royalties, breach of contract and non-payment for his appearance in the documentary. However, last month Bennett wrote on his website that he was hoping to undergo hip-replacement surgery, but was worried about his lack of health insurance. It is easy to surmise that this may have had a bearing on the timing of the lawsuit.

"We are all deeply saddened by this tragedy," Tweedy said on hearing of Bennett's death. "We will miss Jay as we remember him - as a truly unique and gifted human being, and one who made welcome and significant contributions to the band's songs and evolution."

• Jay Walter Bennett, singer, songwriter and instrumentalist, born 15 November 1963; died 24 May 2009